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Government approved the state budget strategy for 2019–2022

27. aprill 2018 - 11:59

Stenbock House, 27 April 2018 – the government approved the state budget strategy for 2019–2022, the amount of expenditure of which will exceed 47 billion euros. The state budget strategy reflects four major goals of the government: to grow the cohesion and population of the Estonian people, to advance the sustainable economic growth of Estonia, and to strengthen the security of Estonia.

“We have the budget strategy of a responsible, human-oriented state that is investing into the future and by approving this strategy, we have taken a major step towards a more coherent, secure, and wise society,“ said Prime Minister Jüri Ratas.

According to the current data, the government sector’s budget for next year has a nominal surplus of 130 million euros. The state budget has a structural balance in 2019–2021 and will reach structural surplus by 2022. No new taxes will be established in 2019. The tax burden of Estonia will be stable near 34% of the GDP and the debt burden of Estonia will decrease to 5.3% of the GDP by 2022.

Focus on growing population

To grow the population, the government will turn their focus on developing services and support for children and families and support the integration of work and family life. For instance, starting from 1 July 2020, a 30-day paternity leave for fathers will enter into force, along with an additional parental benefit for fathers. Additionally, parents have a chance to terminate and balance the parental benefits by calendar month until the child turns three.

The government wishes to ensure the availability of motivated teachers and the addition of young teachers. The government will give an addition of almost 40 million euros to the salary fund of teachers of general education schools over the next four years.

The revenue base of the health insurance fund will be gradually widened to ensure that medical aid is more accessible and the healthcare system more sustainable. The costs for healthcare will be transferred to the budget of the health insurance fund to decrease the disunity of healthcare funding. The additional funds will provide the opportunity to minimise waiting times for treatment as well as to improve the availability of health care services and the consistency and quality of treatment.

Increasing welfare and cohesion

One of the priorities of the government is to increase the welfare and cohesion of Estonia’s society. The government plans to change the organisation of long-term caretaking to support maximum independency, the caretakers’ participation in working life, and families with a member who needs long-term caretaking. In 2019, the Ministry of Social Affairs will support the building of an innovative elderly home with 1.5 million euros. Service spaces will be created for elderly people who need a more complicated care but are currently under the care of a family member due to specific dependencies. The planned home will have a maximum of 50 service spaces. With the second stage of the work ability reform, the direction is taken to ensure that employers assess the risks of the working environment and support the promotion of health of employees.

To increase cohesion in society, the government offers necessary and high-quality language lessons for persons with a native language other than Estonian. Estonian Language Houses will be opened in Narva and in Tallinn, which will be obligated to offer free Estonian courses and develop teaching materials. The government plans to give 300,000 euros a year to improve the signal for the Russian-based national public broadcasting channel ETV+.

To support local economy and creating jobs, the Ida-Virumaa Action Plan and the South-East Estonia Action Plan will be started, for which the government decided to give 7.2 million and 3.2 million euros of additional funds, respectively, until the year 2022.

Sustainable economic growth

The sustainable economic growth of Estonia will be ensured by increasing the funding for research. If a balance between basic financing and competitive research funding is achieved, it will give researchers a greater freedom to choose their research topics according to the demands of society. An additional 53.2 million euros will be given for that purpose next year. The government sector will give an additional funding of 115.4 million euros to research and development during the next budget period.

The government will continue to invest in broadband networks of the next generation in the amount of 9 million euros, thereby helping to improve the availability of internet connection in areas that still do not have a fast internet connection. The government will more actively support the digital revolution in the industrial and construction sectors through an information and communication technology development programme. The total budget for this programme in 2018–2020 is 28 million euros.

In 2019–2022, the government will invest 822.5 euros to road development. Construction will continue on Rail Baltica and other strategical infrastructures. In 2018, the technical projection of a train route and the acquisition of lands will begin. In 2019, the construction for passenger terminals in Pärnu and Ülemiste will begin, with a planned conclusion in the end of 2020. The development works for a sustainable and integrated mobility environment between Vanasadama and the city centre will begin in 2019. Additionally, the reconstruction of a transit route passing Narva will begin, with a monetary amount of 8.9 million euros.

The state will continue to contribute into energy saving and the development of renewable energy. Among other things, the funding will continue for reconstructing residential buildings, and for the areas of street lighting and heating economy. 47.5 million euros is planned for supporting investments into a housing fund for local governments.

72 million euros will be invested into the Estonian fishing sector in 2018–2020, and a total of 482 million euros into the agricultural sector and rural development. This includes an investment support of 15 million euros for the major project of founding an agricultural cooperative dairy industry.

To improve the ability of agriculturalists in Estonia to compete with other manufacturers of the European Union, the government will raise transitional support to a maximum rate. In 2019, this means a total of 16.9 million euros.

The security of Estonia will strengthen

Strengthening the security of Estonia continues to be a priority of the government. More young people will go through conscription in the following years and the number of people in active service will be increased to increase the capability of independent military defence in Estonia. The state will purchase a significant amount of large-calibre ammunition reserve. The conditions for military training will improve and technology will be renewed.

NATO will help to fund the development of the necessary infrastructure to house and train allied forces. The structure of the military will be enlarged by 2022: among other things, a Cyber Command and additional companies will be created to strengthen the military territorial defence.

The government will increase the resistance abilities of the state and the society in case of crises. Better opportunities will be created to protect the citizens in various crises and to raise the awareness and capabilities of the citizens to act in crises.

To ensure energy security, the government will continue with the preparations for connecting the electrical grid of Estonia with the grids of Europe by 2025.

The government will give almost 23 million euros a year for the next four years to significantly increase the salaries of police officers, rescuers and other employees of internal security services.

The decisions made with the state budget strategy will be performed through implementation plans and action plans of development plans for the areas. Based on the state budget strategy, next year’s draft state budget will be created, which the government will submit to the parliament in autumn.

The state budget strategy for 2019–2022 is available here:
https://www.rahandusministeerium.ee/system/files_force/document_files/ri... (PDF) (PDF)

Background information:
 

  • When creating the state budget strategy, the government followed four major goals: advancing economic growth, raising the population, strengthening security, and increasing the welfare and cohesion of the society.
  • The goal of the budget strategy is to plan activities and funding for a long term, taking into account the priorities of the government, the prognosis for the future, and global trends.
  • The budget strategy will tie together the bigger goals of the government, the plans and activities of ministries, and the funding thereof for the next four years.
  • The budget strategy is prepared every spring. The government approves it by the end of April at the latest and in 2019, which is the year of periodic elections, by the end of May at the latest.
  • In autumn, the government will prepare a draft state budget that the parliament will proceed. This is when expenses and revenues for next year will be specified, including, for example, a final salary fund for various fields.